Making Globalization Workby Joseph E. Stiglitz
"A damning denunciation of things as they are, and a platform for how we can do better."—Andrew Leonard, SalonBuilding on the international bestseller Globalization and Its Discontents, Joseph E. Stiglitz offers here an agenda of inventive solutions to our most pressing economic, social, and environmental challenges, with each proposal/em>/p>/em>
"A damning denunciation of things as they are, and a platform for how we can do better."—Andrew Leonard, SalonBuilding on the international bestseller Globalization and Its Discontents, Joseph E. Stiglitz offers here an agenda of inventive solutions to our most pressing economic, social, and environmental challenges, with each proposal guided by the fundamental insight that economic globalization continues to outpace both the political structures and the moral sensitivity required to ensure a just and sustainable world. As economic interdependence continues to gather the peoples of the world into a single community, it brings with it the need to think and act globally. This trenchant, intellectually powerful, and inspiring book is an invaluable step in that process.
The New York Times
Many economists and world leaders agree that globalization is supposed to create higher living standards, increased access to foreign markets, more foreign investment and open borders. But former World Bank Chief Economist and Nobel Prize winner Joseph Stiglitz argues in his latest book, Making Globalization Work (a self-described sequel to his 2002 book, Globalization and Its Discontents), that globalization is desperately failing the 80 percent of the world's population that lives in developing countries and the 40 percent that lives in poverty.
Stiglitz's overall objection is not to globalization itself; it's to how globalization is managed. He argues that the institutions tasked with managing globalization - the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) - help developed nations more than poor nations and place profit ahead of environmental health and better standards of living.
One reason for this, Stiglitz argues, is the United States' excessive influence on the system. The IMF, for example, assigns votes according to economic size, giving the United States effective veto power. Further, the U.S. president appoints the head of the World Bank. This concentration of power has led to what Stiglitz calls "the Washington Consensus," his term for the lock-step policies shared by the IMF, the World Bank and the U.S. Treasury. The result is that these institutions are only really accountable to wealthy countries rather than the poor countries they are tasked with helping.
What's worse, Stiglitz writes, is that when poor countries seek aid, the Washington Consensus attaches economic policies and lending conditions that are often counterproductive and even undermine the sovereignty of those nations. Its requirements often include massive privatization, spending cuts, lower import tariffs and exposure to volatile foreign capital - four things Stiglitz explains are precisely what developing countries don't need when they're in dire straits. Consequently, Stiglitz argues, countries that have followed the advice of this powerful block have failed almost 100 percent of the time to maintain economic stability.
Stiglitz offers a litany of specific reforms to the globalization management system, but, ultimately, they all rest on the (some might say provocative) idea that the regulatory power of government, rather than unfettered capitalism, makes free markets work. Absent this oversight, he writes, markets dissolve into chaos, dishonesty and secrecy.
One of Stiglitz's biggest proposed reforms is to the global reserve system's dependence on Treasury securities, which he argues is actually a mechanism for funding U.S. overconsumption habits. Stiglitz calls for a new, global reserve currency (called "global greenbacks") system that would stabilize the worldwide yin-yang effect of trade surpluses and deficits.
Stiglitz also proposes global regulation that would restrict activities and political instabilities that harm the environment, and would provide recourse when one nation's environmental actions harm other countries. Stiglitz further argues that poor countries are entitled to compensation for maintaining their biodiversity, especially those with rainforests that spawn drugs and sequester carbon dioxide.
Western banks and multinational corporations are also on Stiglitz's list of institutions needing global oversight. He argues that today's thick corporate veil regrettably tends to relieve employees of moral responsibility. Part of the solution to this, he writes, is more leeway regarding global class-action suits and more enforcement of intellectual property laws so that, for example, AIDS drugs become more accessible rather than more profitable.
Ultimately, Stiglitz concedes, the solution to many of the problems of globalization management lies at the feet of poor countries, which must break the bribery cycle between their governments and international companies, sell their natural resources for a fair price, spend - and save - their money wisely and learn to manage currency fluctuations.
Despite all the protest, Stiglitz is clearly still a cautiously optimistic supporter of globalization. But he is confident that the United States cannot continue to control the world's major economic aid institutions without producing results for the poor countries of the world.
Why We Like This Book
Making Globalization Work explores the problems surrounding the management of globalization. It contributes considerably to the political discourse about the role of governments in the free market through its nuts-and-bolts appraisals of NAFTA, the WTO, the Kyoto Protocol and many other elements of today's globalization debate. But the heart of the book is about finding better ways to make globalization work for the hundreds of millions of people who live in developing countries and in poverty. Copyright © 2007 Soundview Executive Book Summaries
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Meet the Author
Joseph E. Stiglitz is a Nobel Prize–winning economist and the best-selling author of The Great Divide, Rewriting the Rules of the American Economy, The Price of Inequality, Freefall: America, Free Markets, and the Sinking of the World Economy, and Globalization and Its Discontents. He is a columnist for the New York Times and Project Syndicate and has written for Vanity Fair, Politico, The Atlantic, and Harper’s. He teaches at Columbia University and lives in New York City.
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In this thought-provoking book, Stiglitz examines the failures of globalisation and of free trade, the current intellectual property rights regime, the pillage of resources, climate change, the multinational corporations' impact, the debt burden, the dollar's role as the world's reserve currency, and globalisation's effects on democracy and sovereignty. He believes the problem is not globalisation but the way it has been managed. He notes of globalisation post-1990, "unchecked by competition to 'win the hearts and minds' of those in the Third World, the advanced industrial countries actually created a global trade regime that helped their special corporate and financial interests, and hurt the poorest countries of the world." So Third World countries have got deeper into debt. Apart from China, poverty in the developing world has increased since 1980: 40% of the world, 2.6 billion people, are poor. The number of Africans in extreme poverty has doubled. In 2001 the USA and the EU agreed to focus on developing countries' needs, but, as Stiglitz points out, they reneged. Why don't necessary reforms ever get put into practice? He points out, "the pursuit of self-interest by CEOs, accountants, and investment banks did not lead to economic efficiency, but rather to a bubble accompanied by massive misallocation of resources." This refutes his later, oddly slight, argument for capitalism: "Markets are essential; markets help allocate resources, ensuring that they are well deployed." No - 'profitably', not 'well'. He points out that current economic policy serves ruling class interests: "Wealth generates power, the power that enables the ruling class to maintain that wealth." He exposes the class conflict at the centre of economic life. He observes, "the European Central Bank pursues a monetary policy that, while it may do wonders for bond markets by keeping inflation low and bond prices high, has left Europe's growth and employment in shambles." And he asks, "Where will the people of the developed countries and their governments stand? In support of the few in those countries who own and run the rich corporations, or in support of the billions in the developing countries whose well-being, in some cases, whose very survival, is at stake?" His analysis is brilliant, but his proposals rely on ruling classes choosing to act against their own interests: he proposes reforms he knows they won't accept.
One of the key objectives of this book, Making Globalization Work was to prove that the problem with globalization is not the concept of globalization, but how it has been managed. Therefore the book presented many different ways that globalization has failed and suggestions for solutions. I believe the book makes an excellent case for the advantages of government intervention in pushing the economy in a positive way. Many believe that government can add little to the economy and that in general, innovation is stymied by government rules and regulations. However, Stiglitz makes the case that this theory is mostly rhetoric and in the real world, government regulations can protect and encourage innovation. The reason for the difference between the theory and reality is asymmetrical relationships. Economic theory assumes a perfect world in which everyone has access to all information, equal access to capital, labor, information, etc. The reality is that all parties do not have equal access to capital, labor, or information. Successful governments have focused on practicalities, even if that meant ignoring or modifying IMF recommendations. Globalization can create winners, but not everyone will be a winner. Some will be losers, and society must realize that in order to maintain civil order and stability, it will need to impose ways to spread some of the winnings around. Of course, the winners will complain and object, but it must be done. Without the changes, globalization might continue, but the will to support it will weaken, leading us to a less stable future. So a brighter future requires that everyone gives a little, and mostly that will require that governments require that the benefits of globalization be spread out through taxes, regulations, requirements, etc.
Most of the rules and policies made in developed nations are not beneficial to developing nations
Just about every major gathering of world leaders draws determined, often violent, protests against globalization. If you wonder why, Joseph E. Stiglitz's book explains ample reasons. The Nobel Prize-winning economist follows up his 2002 book, Globalization and Its Discontents, with further analysis of pressing economic, political and environmental concerns, and the conflicts they engender between developing and developed countries. He doesn't just dwell on the dreadful problems he outlines in such knowledgeable detail. He also offers remedies and reforms, though some seem quite idealistic for a notable economist who sees so clearly what has gone wrong. His book is densely packed with data, case studies and facts, but Stiglitz intersperses the dry material with thoughtful asides on the questions of morality and equity that globalization must answer. getAbstract finds that his book will enlighten readers about the challenges and consequences of globalization on humankind's one and only planet. Read more about this book in the online summary: http://www.getabstract.com/summary/5843/making-globalization-work.html